Bitcoin Won’t Make New Highs Until S&P 500 Does: Fundstrat

Bitcoin might have outperformed the S&P 500 index on a year-to-date scale, but the cryptocurrency would need to rely on the US equity benchmark to establish its all-time high, according to Thomas Lee of New York-based Fundstrat Global Advisors.

The co-founder on Thursday discussed the similarities between the trends of bitcoin and S&P 500 over the past decade. He stated that the cryptocurrency performed better whenever the index was 15 percent up from its 2009 average. At the same time, a depressive S&P 500 saw bitcoin underperforming, barring the year 2015, as shown in the chart below.

President Donald Trump said yesterday that the White House would delay growing tariffs on $250 billion worth of Chinese imports. His decision came after Beijing lifted additional taxes on some US goods. Trade-sensitive stocks led the S&P 500 up by 0.3 percent, its best since July.

Meanwhile, investors interpreted ECB President’s Mario Draghi easing approach as a cue for the Federal Reserve to introduce similar measures to prop up the US economy. Trump earlier bombarded the US central bank officials with a string of tweets, demanding rate cuts below zero as their European counterpart weakens the Euro. The Federal Reserve is expecting to reduce rates by 25 bps in a meeting next week.

Analysts see a rate cut as a bullish sign for S&P 500, going by the index’s response to similar Fed calls since the early 1980s.

Investors don’t fight the fed | Image credits: S&P 500

“Declines in returns during an easing cycle occasionally happen but are exceedingly rare,” Jason Trennert, chief investment strategist of Strategas, said in a note to clients in July. “With policy rates and 10-year yields at the highest levels in the developed world, the Fed appears to have plenty of room to ease without fear of prompting overheating.”

Bitcoin Uptrend, Meanwhile

Lee thinks a macroeconomic calamity is the least a bitcoin bull should wish for as of now. A rally in risk-on assets, on the other hand, gives bitcoin wings to fly.

The point of this tweet is to suggest that rooting for financial calamity may not be positive for the health of $BTC in the near term.